Structural Adjustment Programs
Canadian aid promoted Structural Adjustment Programs (SAP). The IMF and World Bank, dominated by the finance departments of the G7 countries, offered to lend money to the debtor countries on the condition that they radically reform their economies along neoliberal lines. Bilateral aid agencies, including Canada's, quickly aligned their policies with the IMF and World Bank, making aid conditional on the implementation of far-reaching SAPs.
These policies emphasized repaying debts, attracting foreign investment and producing for export markets. SAPs focused on weakening labour protections, dismantling regulations, lowering taxes on big business and privatizing public enterprises. In order to free up resources to pay the debt and promote export production, governments were required to slash social programs, end “price distorting” subsidies and lay off state employees. These policies were supposed to allow poor countries to pay off their debts while spurring economic growth, the benefits of which would then trickle down to the poor. In effect, structural adjustment was an assault on popular living standards
Ottawa was a major proponent of the shift towards neoliberal policies imposed by the various international financial institutions. At the start of the 1980s Department of Finance officials representing Canada at the World Bank/IMF backed these institutions’ shift towards structural adjustment. As the decade wore on Canada’s aid agency increasingly aligned its policies with those of the multilateral donor institutions. In 1986 CIDA announced a five-year moratorium on debt payments owed to it by low-income African countries that adopted an SAP. The next year CIDA’s Winegard Report placed structural adjustment second of six new aid agency priorities.
After five years as executive director of the IMF, Marcel Massé returned to the presidency of CIDA in 1989 and openly stated his desire to shape economic policy in impoverished countries. “As CIDA we cannot merely look at a series of projects as development,” noted Massé. “We have to be concerned about the overall economic policies, and we have to try to influence them.”
In her 1991 thesis "The Use of Canadian Aid to Support Structural Adjustment in Africa" Carolyn Mary Bassett summarizes the many ways in which the Canadian aid agency backed SAPs. “CIDA now channels resources towards countries which have adopted structural adjustment programs, makes resources available specifically for projects related to a country’s structural adjustment agreement, and penalizes countries which do not maintain their agreement by slowing disbursements and cancelling some aid.”
Tens (perhaps even hundreds) of millions of dollars in Canadian aid supported SAPs. According to two different estimates, between 20 and 25 percent of Canadian aid to Africa in the late 1980s and early 1990s was channelled towards structural adjustment. In a particularly striking example, a 1987 CIDA memo explained, “approximately 35-40 percent of cash flow for the next five-year period will be transferred as unstructured program aid to support balance of payments … all elements under this theme will be tied to satisfactory performance by Ghana under an internationally accepted SAP.”